The PURPOSE (why/what): to make a Difference
The second critical component of entrepreneurship is the purpose. In other words; to what end is your entrepreneurial journey? Or better still; why did you become an entrepreneur? What are you trying to accomplish by becoming an entrepreneur? This critical component of entrepreneurship is necessary for all existing entrepreneurs and would be entrepreneurs because it serves as a compass to guide your business activities. Without it, many entrepreneurs have derailed and watched their businesses collapse as a result. There’s only one true purpose for entrepreneurship; to make a difference in the lives of your customers through the products/services you create and sell to them.
In other words, the purpose of entrepreneurship is to add value for customers and ultimately society. If a business is to succeed, it must aim to add value to customers through continuous innovation and finding new ways of making a difference. The reason many people go into business and eventually fail is because they didn’t clearly understand the purpose of entrepreneurship.
To many in this category, entrepreneurship is about making all the money you can through a business. Consequently, they go into business with a selfish mentality determined to GET as much money as they can without first considering how much they have to GIVE in exchange for the money they seek. Entrepreneurs with this selfish mentality fail in business because they have violated the very purpose of entrepreneurship, which is to make a difference through your products/services. Thinking about the money [profit] you will get first rather than the products/services [value] you should create is the recipe for business failure. In the world of business, there’s only one way to make money; consistently creating and selling products/services that add value to humanity. Death is the eventual outcome of any business that doesn’t make this purpose of entrepreneurship their core guiding principle.
The PROCESS (how): through a Business
Business is the tool entrepreneurs use to make a difference in the lives of their target customers. Without creating a business, entrepreneurs greatly limit their capacity to make a difference. Why, because you are limited as a person. As an individual, there’s only so much you can do to satisfy your customers. Sooner or later, you will be overwhelmed by all the different activities required to provide the products/services your customers demand. So don’t attempt to go down that road, you will only entrap yourself.
The process of entrepreneurship is all about building a business and not about doing business. The reason for the failure of most small businesses can be traced back to this mistake of doing rather than building a business. Building a business is about creating systems that will power the activities required to create and sell products/services to your customers. These systems will involve both people and machines; through them your capacity as an entrepreneur to make a difference is greatly amplified.
There are essentially 5 core inter-related systems you need to create;
Human Resources [HR] – a specific process of finding, hiring, training, retaining and firing workers.
Finance – a specific process of sourcing, allocating and managing funds.
Marketing – a specific process of attracting, retaining and growing profitable customers.
Production – a specific process of converting resources into finished goods and services.
Distribution – a specific process of delivering products/services to your customers.
The process of entrepreneurship is about putting all these things in place in your business. They are the pillars on which you will build your business. The more effective and efficient these core inter-dependent systems are, the quicker your business will grow and the bigger the difference you can make.